Correlation Between Acelon Chemicals and ZongTai Real

Can any of the company-specific risk be diversified away by investing in both Acelon Chemicals and ZongTai Real at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Acelon Chemicals and ZongTai Real into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Acelon Chemicals Fiber and ZongTai Real Estate, you can compare the effects of market volatilities on Acelon Chemicals and ZongTai Real and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Acelon Chemicals with a short position of ZongTai Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acelon Chemicals and ZongTai Real.

Diversification Opportunities for Acelon Chemicals and ZongTai Real

0.57

Correlation Coefficient

Acelon Chemicals  ZongTai Real

Very weak diversification

The 3 months correlation between Acelon and ZongTai is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Acelon Chemicals Fiber and ZongTai Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZongTai Real Estate and Acelon Chemicals is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Acelon Chemicals Fiber are associated (or correlated) with ZongTai Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZongTai Real Estate has no effect on the direction of Acelon Chemicals i.e., Acelon Chemicals and ZongTai Real go up and down completely randomly.

Pair Corralation between Acelon Chemicals and ZongTai Real

Assuming the 90 days trading horizon Acelon Chemicals Fiber is expected to under-perform the ZongTai Real. But the stock apears to be less risky and, when comparing its historical volatility, Acelon Chemicals Fiber is 1.11 times less risky than ZongTai Real. The stock trades about -0.01 of its potential returns per unit of risk. The ZongTai Real Estate is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,230  in ZongTai Real Estate on October 25, 2024 and sell it today you would lose (15.00) from holding ZongTai Real Estate or give up 0.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Acelon Chemicals Fiber  vs.  ZongTai Real Estate

Acelon Chemicals Fiber

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acelon Chemicals Fiber has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

ZongTai Real Estate

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ZongTai Real Estate are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, ZongTai Real is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Acelon Chemicals and ZongTai Real

The main advantage of trading using opposite Acelon Chemicals and ZongTai Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acelon Chemicals position performs unexpectedly, ZongTai Real can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ZongTai Real will offset losses from the drop in ZongTai Real's long position.

The idea behind Acelon Chemicals Fiber and ZongTai Real Estate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.